Shri Suren Arvindbhai Vakil, Ahmedabad v. The Income tax Officer,Ward-1(2),, Ahmedabad

ITA 826/AHD/2009 | 2002-2003
Pronouncement Date: 06-08-2010 | Result: Allowed

Appeal Details

RSA Number 82620514 RSA 2009
Assessee PAN ABCPV7597A
Bench Ahmedabad
Appeal Number ITA 826/AHD/2009
Duration Of Justice 1 year(s) 4 month(s) 20 day(s)
Appellant Shri Suren Arvindbhai Vakil, Ahmedabad
Respondent The Income tax Officer,Ward-1(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 06-08-2010
Date Of Final Hearing 20-07-2010
Next Hearing Date 20-07-2010
Assessment Year 2002-2003
Appeal Filed On 16-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI MUKUL SHRAWAT JM & SHRI A N PAHUJA AM ITA NOS.826 1318 AND 1319/AHD/2009 (ASSESSMENT YEARS:-2002-03 2003-04 AND 2004-05) SHRI SUREN ARVINDBHAI VAKIL 3 ASOPALAV BUNGALOWS BHAIKAKA NAGAR THALTEJ AHMEDABAD [PAN: ABCPV 7597 A] V/S INCOME-TAX OFFICER WARD- 1(2) AHMEDABAD [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI S N SOPARKAR AR REVENUE BY:- SHRI U S RAINA DR O R D E R A N PAHUJA: THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THREE SEPARATE ORDERS DATED 23-12-2008 12- 01-2009 AND 09- 01-2009 OF THE LD. CIT(APPEALS)-VI AHMEDABAD UPH OLDING THE PENALTY OF RS.4 19 832/- IN THE AY 2002-03 RS.13 24 702/- IN THE AY 2003-04 AND RS.20 42 396/- IN THE AY 2004-05 RESP ECTIVELY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOM E-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT]. SIN CE SIMILAR ISSUES WERE INVOLVED THESE THREE APPEALS WERE HEARD SIMUL TANEOUSLY FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF T HROUGH THIS COMMON ORDER. 2 FACTS IN BRIEF AS PER RELEVANT ORDERS FOR THE A Y 2004-05 ARE THAT RETURN DECLARING INCOME OF RS.8 38 790/- FILED ON 03-08-2004 BY THE ASSESSEE A DIRECTOR IN BARBTIE CONSULTANTS (I) P LTD. AFTER BEING PROCESSED ON 16.9.2004 U/S 143(1) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS THE ACT] WAS SELECTE D FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 26.4. 2005. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER [AO IN SHORT] NOTICED THAT THE ASSESSEE CLAIMED EXEMPTION FOR AN AMOUNT OF RS.30 26 010/- U/S 10 OF THE ACT OUT OF SALARY OF RS.36 31 212/- ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 2 WHILE IN THE FORM NO. 16 ONLY AN AMOUNT OF RS.68 74 2/- HAD BEEN CLAIMED AS EXEMPT AND TAX HAD BEEN DEDUCTED AT SOUR CE FROM THE SALARY OF RS.35 41 510/- . INTER ALIA A LETTER DA TED 09.11.2001 FROM HEAD URBAN DEVELOPMENT INDIA RESIDENT MISSION AS IAN DEVELOPMENT BANK WAS STATED TO HAVE BEEN ENCLOSED B Y THE ASSESSEE ALONG WITH RETURN MENTIONING AS UNDER:- 'THIS IS TO CERTIFY THAT SUREN VAKIL HAS BEEN ENGAG ED BY THE ASIAN DEVELOPMENT BANK AS A CONSULTANT FOR THE ABOV E PROJECT IN THE CAPACITY OF TEAM LEADER FROM THE PERIOD 19 N OVEMBER 2001 TO 31 JANUARY 2004. AS AGREED BY THE GOVERNMENT OF INDIA THE CONSULTANT IS ENTITLED TO THE COURTESIES FACILITIES PRIVILEGES AND IMMUNITIES IN ACCORDANCE WITH THE ARTICLES OF AGREEMENT ESTABL ISHING THE ASIAN DEVELOPMENT BANK.' 2.1 SINCE THE AMOUNT OF RS. 30 26 010/- WAS NOT DIRECTLY RECEIVED FROM ASIAN DEVELOPMENT BANK (HEREINAFTER REFERRED T O AS ADB) TO A QUERY BY THE AO VIDE ORDER SHEET ENTRY DATED 23.05. 2006 THE ASSESSEE DID NOT OFFER ANY REPLY . IN RESPONSE TO A NOTHER LETTER DATED 06.07.2006 THE ASSESSEE SUBMITTED VIDE HIS LETTER DATED 11.08.2006 THAT THERE WAS NO AGREEMENT FOR EMPLOYMENT OF THE A SSESSEE WITH ADB AND THAT THE ASSESSSEE WAS WORKING AS DIRECTOR OF THE COMPANY BABTIE CONSULTANTS (INDIA) PVT. LTD.. ALONG WITH HIS SUBMISSIONS THE ASSESSEE ENCLOSED A LETTER DATED 23-06-2006 FROM PRINCIPAL PROCUREMENT SPECIALIST CENTRAL OPER ATIONS SERVICES DIVISION 1 ASIAN DEVELOPMENT BANK THE RELEVANT P ORTION OF WHICH READS AS UNDER :- 'THIS IS TO CONFIRM THAT MR. SUREN VAKIL (THE CONSU LTANT) IS A CONSULTANT FOR BABTIE GROUP LTD. UNITED KINGDOM (T HE FIRM) AND THE FIRM HAS BEEN RETAINED BY THE ASIAN DEVELOP MENT BANK (ADB) AS A CONSULTANT FOR TA 3644-IND: CAPACIT Y BUILDING FOR EARTHQUAKE REHABILITATION AND RECONSTR UCTION OF ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 3 HOUSING PROJECT FOR THE PERIOD OF 19 NOVEMBER 2001 TO 31 ST JANUARY 2004. WITH REFERENCE TO THE PROVISIONS OF THE AGREEMENT E STABLISHING THE ASIAN DEVELOPMENT BANK (THE CHARTER) THE FIRM AND EACH OF ITS CONSULTANTS IS AN EXPERT PERFORMING A MISSIO N FOR ADB AND AS SUCH IS ENTITLED TO THE IMMUNITIES PRIVILEG ES AND EXEMPTIONS SET FORTH IN ARTICLES 55 AND 56 OF THE C HARTER.' 2.2 TO A FURTHER QUERY BY THE AO THE ASSESSEE VIDE ANOTHER LETTER DATED 30.08.2006 SUBMITTED A COPY OF AGREEMENT WIT H ADB AND TWO CERTIFICATES OF FOREIGN INWARD REMITTANCE. ON PERUS AL OF THESE DOCUMENTS THE AO OBSERVED THAT THE AGREEMENT DATE D 26.10.2001 WAS ENTERED IN TO BETWEEN ADB AND BABTIE GROUP LTD UNITED KINGDOM (CONSULTANT) FOR PROVIDING TECHNICAL ASSIST ANCE FOR THE CAPACITY BUILDING FOR EARTHQUAKE REHABILITATION AND RECONSTRUCTION OF HOUSING IN ACCORDANCE WITH THE TERMS AND CONDIT IONS PROVIDED IN THE AGREEMENT. FIELD WORK FOR THE PROJECT WAS REQUI RED TO COMMENCE BY 19TH NOVEMBER 2001 AND HAD TO BE COMPLETED BY 1 8 NOVEMBER 2003 (PROJECT WAS HOWEVER EXTENDED AND IT WAS COMPL ETED ON 31.01.2004). THE AO FURTHER POINTED OUT THAT THE T WO CERTIFICATES OF FOREIGN INWARD REMITTANCE REVEALED THAT BABTIE GROU P LTD U.K. HAD MADE CERTAIN PAYMENTS TO BABTIE CONSULTANTS INDIA. THE PURPOSE FOR PAYMENTS STATED IN ONE CERTIFICATE WAS 'JOB WORK FO R A CLIENT' AND IN THE OTHER CERTIFICATE PURPOSE WAS NOT STATED. 2.3 THE AO FURTHER NOTICED THAT THE AFORESAID AGREEMENT PROVIDED FOR A 'TEAM LEADER' TO CO-ORDINATE THE OPERATIONS OF TH E 'PERSONNEL' AND THESE 'PERSONNEL' WERE SUPPOSED TO CARRY OUT THE WO RK OF THE ADB PROJECT. APPOINTMENT OF THE PERSONNEL CONDITIONS O F THEIR WORK AND PAYMENT TO THEM WAS GOVERNED BY SEPARATE CLAUSES IN THE AGREEMENT. THE WORD 'CONSULTANT' . IN THE AGREEMENT WAS SPECIFICALLY ASSIGNED TO BABTIE GROUP LTD. SECTION 12.02 OF ARTI CLE - XI UNDER GENERAL CONDITIONS TO THE AGREEMENT SPECIFICALLY PR OVIDED THAT THE ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 4 CONSULTANTS AND THE PERSONNEL SHALL HAVE THE STATUS OF EXPERTS PERFORMING MISSIONS FOR ADB AND THAT THEY SHALL BE ENTITLED TO THE PRIVILEGES EXEMPTIONS AND IMMUNITIES CONFERRED UPO N SUCH EXPERTS. SINCE THE ASSESSEE WAS WORKING AS TEAM LEADER IN T HE LIGHT OF AFORESAID LETTER DATED 9.11.2001 FROM THE HEAD UR BAN DEVELOPMENT ADB & LETTER DATED 23.6.2006 FROM PRIN CIPAL PROCUREMENT SPECIALIST CENTRAL OPERATIONS SERVICES DIVISION 1 ASIAN DEVELOPMENT BANK THE ASSESSEE CLAIMED EXEMPT ION OF EMOLUMENTS RECEIVED BY HIM FOR HIS SERVICES RENDER ED AS THE CONSULTANT AND TEAM LEADER OF THE AFORESAID ADB PRO JECT IN TERMS OF THE PROVISIONS OF ARTICLE-56(2) OF THE AGREEMENT ESTABLISHING ADB. HOWEVER THE AO REJECTED THESE CONTENTIONS SIN CE THE ASSESSEE WAS NOT DIRECTLY INVOLVED OR WORKING AS A PERSONNEL OF THE ADB NOR RECEIVED EMOLUMENTS DIRECTLY FROM THE ADB WHILE THE ADB PROJECT WAS ASSIGNED TO BABTIE GROUP LTD. AND H AD BEEN CARRIED OUT BY BABTIE CONSULTANT (I) PVT. LTD AHMEDABAD A WHOLLY OWNED SUBSIDIARY OF BABTIE GROUP LTD U.K. THE ASSESSEE M R. SUREN VAKIL WAS ONLY A DIRECTOR OF BABTIE CONSULTANT (I) PVT. L TD AND WAS DESIGNATED BY THE COMPANY AS TEAM LEADER TO ACT ON THEIR BEHALF. ACCORDINGLY THE AO DENIED EXEMPTION FOR AN AMOUNT OF RS.30 26 010/-.INTER ALIA PENALTY PROCEEDINGS U/S 271(L)(C) WERE ALSO INITIATED FOR CONCEALMENT & FURNISHING INACCUR ATE PARTICULARS OF INCOME SINCE DESPITE HAVING FULL KNOWLEDGE OF THE FACTS THE ASSESSEE MADE A FALSE CLAIM OF EXEMPTION. 3. ON THE BASIS OF HIS AFORESAID FINDINGS IN T HE AY 2004-05 THE AO REOPENED THE ASSESSMENTS FOR THE AY 2002-03 & 20 03-04 WITH THE ISSUE OF NOTICE U/S 148 OF THE ACT ON 3.1.2007 AND DENIED THE CLAIM FOR EXEMPTION FOR AN AMOUNT OF RS. 6 86 000/- IN THE AY2002- 03 & RS.20 67 702/- IN THE AY 2003-04. IN THE RETUR NS FILED FOR THESE TWO ASSESSMENT YEARS IN RESPONSE TO NOTICE U/S 148 OF THE ACT THE ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 5 ASSESSEE DECLARED INCOME OF RS.20 41 007/- & RS.22 85 110/- RESPECTIVELY AS AGAINST RS. 13 55 010/- & RS.2 17 4 06/- IN THE RESPECTIVE ORIGINAL RETURNS. PENALTY PROCEEDINGS U /S 271(1)(C) OF THE ACT WERE ALSO INITIATED FOR CONCEALMENT & FURNISHI NG INACCURATE PARTICULARS OF INCOME FOR CLAIMING EXEMPTION OF THE AFORESAID AMOUNTS IN THE ORIGINAL RETURNS. 4 ON APPEAL THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO IN THE AY 2004-05 VIDE HIS ORDER DATED 26.4.2007 WHILE TH E ASSESSEE DID NOT PREFER ANY APPEAL IN THE AYS 2002-03 & 2003-04. THEREAFTER IN RESPONSE TO A SHOWCAUSE NOTICE DATED 19.06.2007 I SSUED BEFORE LEVY OF PENALTY IN THE AY 2004-05 & SIMILAR NOTICES DATED 29.6.2007 FOR THE AYS. 2002-03 & 2003-04 THE ASSESSEE REPLI ED VIDE LETTERS FILED ON 28.06.2007 ALONG WITH A COPY OF HIS EARLIE R REPLY DATED 8.12.2006 AND LETTERS DATED 7.10.2007 THAT ALL THE MATERIAL INFORMATION FOR COMPUTATION OF INCOME WAS DISCLOSED IN THE STATEMENT OF COMPUTATION OF INCOME IN THE RETURNS F OR THESE ASSESSMENT YEARS. WHILE RELYING UPON DECISIONS IN T HE CASE OF CIT V. MANILAL TARACHAND 254 ITR 630 (GUJ.) CIT V. SARABHA I CHEMICALS PVT. LTD 257 ITR 355 (GUJ.) AND T. ASHOK PAI V. CI T BANGALORE 292 ITR 11(SC) IT WAS CONTENDED THAT THE ASSESSEE DID NOT FILE ANY INACCURATE PARTICULARS NOR CONCEALED ANY INCOME WH ILE THE ENTIRE TAX DUE ON THE ASSESSED INCOME HAD ALREADY BEEN PAID AT THE TIME OF FILING OF RETURN ALONG WITH A NOTE SUPPORTING HIS BONA FIDE CLAIM. HOWEVER THE AO DID NOT ACCEPT THESE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE CLAIMED EXEMPTION DESPITE BEING AWARE OF FULL FACTS THAT HE WAS NOT ELIGIBLE FOR SUCH EXEMP TION AND EVEN DURING THE ASSESSMENT PROCEEDINGS MAINTAINED HIS CLAIM. MO REOVER THE ASSESSEE DID NOT SUBMIT COPY OF APPENDIX B TO CLAUSE 3 OF THE AGREEM ENT WHICH CONTAINED LIST OF PERSONNEL WHO HAD CARRIED OUT THE WORK FOR THE ASI AN DEVELOPMENT BANK. ACCORDINGLY THE AO CONCLUDED THAT THE CONTENTION O F THE ASSESSEE THAT HE HAD ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 6 MADE FULL AND TRUE DISCLOSURE OF FACTS IN RELATION TO HIS CLAIM OF EXEMPTION WAS NOT CORRECT. THEREFORE THE AO IMPOSED A PENALTY OF RS.20 42 296/- @ 200% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.30 26 010/- FOR DELIBERATELY FURNISHING INACCURATE PARTICULARS OF THE SAID INCO ME IN THE AY 2004-05. 5. LIKEWISE THE AO IMPOSED A PENALTY OF RS.4 19 832/- @ 200% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.6 86 000/- FOR DELIBERATELY FURNISHING INACCURATE PARTICULARS OF THE SAID INCOME IN THE AY.2002-03 & A PENALTY OF RS.13 24 702/- @ 200% OF THE TAX SOUGHT TO BE EVADE D ON THE INCOME OF RS.20 67 702/- FOR DELIBERATELY FURNISHING INACCUR ATE PARTICULARS OF THE INCOME IN THE AY 2003-04 6 ON APPEAL THE LD. CIT(A) WHILE CITING DECISIONS IN CIT V. KOTRIKA VENKATSWAMY & SONS (1971) 79 ITR 499 (SC); SIR SHADILAL SUGAR & GENERAL MILLS LTD. V. CIT (1987) 168 ITR 705 (SC); CIT V. R.R. STEEL & ALLOYS LTD. SLP (CIVIL) NO. 7321 OF 1993; (1993) 201 ITR ( ST.) 55-56 (SC); CIT V. ROHIT MILLS SLP (CIVIL) NO. 4432 OF 1994; (1994) 206 ITR (ST.) 283 (SC); AND CIT V. MUSSADILAL RAM BHAROSE (1987) 165 ITR 14 23 (SC) UPHELD THE LEVY OF PENALTY IN THE AY 2004-05 IN THE FOLLOWING TERMS: KEEPING IN VIEW THE AFORESAID FACTS; CIRCUMSTANCES AND VARIOUS JUDICIAL PRONOUNCEMENTS THE FACT IS ABUNDANTLY CLEAR THAT T HE APPELLANT IS NOT DIRECTLY INVOLVED OR WORKING AS A PERSONNEL FOR THE ASIAN DEVELOPMENT BANK. FURTHER NO PAYMENT HAS BEEN RECEIVED DIRECTL Y BY HIM FROM THE ASIAN DEVELOPMENT BANK AND IT IS ALSO A FACT THAT N O WORK HAS BEEN DONE BY HIM FOR ASIAN DEVELOPMENT BANK BUT IN FACT HE IS A DIRECTOR OF BABTIE CONSULTANTS GROUP (BCIL) AND IS BEING PAID SALARY B Y THE BCIL IN HIS CAPACITY AS DIRECTOR OF THE BCIL. IT IS ALSO A FACT THAT NO EXEMPTION IS ALLOWABLE FROM THE SALARY PAID BY BCIL TO ITS DIREC TOR. IT IS NOT OUT OF PLACE TO MENTION HERE THAT THE QUANTUM IN QUESTION HAS BE EN CONFIRMED BY THE CIT(A). THUS IT IS ABUNDANTLY CLEAR THAT THE APPEL LANT HAS CLAIMED EXEMPTION EVEN THOUGH HE IS AWARE OF THE FACT THAT HE IS NOT ELIGIBLE FOR THE SAME. IT IS ALSO A FACT THAT DURING THE WHOLE ASSES SMENT PROCEEDINGS THE APPELLANT INSISTED ON HIS STAND; SO MUCH SO THE COP Y OF AGREEMENT WITH ASIAN DEVELOPMENT BANK WAS SUBMITTED BY HIM WITHOUT APPENDIX-B TO CLAUSE 3 WHICH CONTAINS THE LIST OF PERSONNEL WHO C ARRIED OUT THE WORK OF ASIAN DEVELOPMENT BANK. THIS SINGLE ACT OF THE APPE LLANT CLEARLY PROVES ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 7 THE DELIBERATE AND INTENTIONAL CONCEALMENT OF THE F ACTS BY THE APPELLANT. IN THE GIVEN FACTS AND CIRCUMSTANCES THE APPELLANT'S CLAIM OF FULL AND TRUE DISCLOSURE OF FACTS IS NOT AT ALL CORRECT. IN THE G IVEN FACTS AND CIRCUMSTANCES THE JUDGEMENTS (I.E. CIT V. MANEKLAL TARACHAND 254 ITR 630 (GUJARAT) AND CIT V. SARABHAI CHEMICALS PVT. LT D. 257 ITR 355 (GUJ) AND THE JUDGMENT OF THE HON'BLE SUPREME COURT IN TH E CASE OF T. ASHOK PAI V. CIT BANGALORE) RELIED UPON BY THE APPELLANT ARE NOT AT ALL APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANT. KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANC ES IT IS ABUNDANTLY CLEAR THAT THE MERE FACT THAT SOME FIGURE OF SOME P ARTICULARS HAVE BEEN DISCLOSED BY ITSELF EVEN IF TAKES OUT THE CASE FRO M THE PURVIEW OF NON- DISCLOSURES IT CANNOT BY ITSELF TAKE OUT THE CASE FROM THE PURVIEW OF FURNISHING INACCURATE PARTICULARS. IN ANY CASE DIS CLOSURE WHICH HAS BEEN MADE IN PART IN THE RETURN WHICH IS INCORRECT OR FA LSE TO THE KNOWLEDGE OF THE APPELLANT AND IF THAT FACT IS ESTABLISHED SUCH DISCLOSURE CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF P ARTICULARS FOR THE PURPOSE OF LEVY OF PENALTY. [(A) CIT VS. VIDYAGAURI NATVERLAL 238 ITR 91 (GUJ); (B) KANTILAL MANILA! 130'ITR 411 (GUJ); (C) SULEMAN ABDUL 139 ITR 8 (GUJ); (D) MANLABHAI BHANABHAI 163 ITR 189(GUJ); (E ) SMT. VILASBEN HASMUKHLAL SHAH 192 ITR 214 AND (F) ABDULGAFUR AHME D WAGMAR 1991TR 827(GUJ)]. KEEPING IN VIEW THE AFORESAID FACTS; CIRCUMSTANCES; AND VARIOUS JUDICIAL PRONOUNCEMENTS IT IS ABUNDANTLY CLEAR THAT THE APP ELLANT HAS CLEARLY CONCEALED THE PARTICULARS OF INCOME/FURNISHED INACC URATE PARTICULARS OF INCOME. THE FACTS AND CIRCUMSTANCES SPONTANEOUSLY L EAD TO THE LOGICAL CONCLUSION THAT THE APPELLANT HAS CONCEALED/FURNISH ED INACCURATE PARTICULARS OF INCOME. FURTHER THE FACTS AND CIRCU MSTANCES SHOW BEYOND ANY DOUBT THAT THERE WAS. ANIMUS I.E. CONSCIOUS C ONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE APPELLANT. KEEPING IN VIEW THE GRAVITY OF THE DEFAULT I.E. DELIBERATE AND INTENTIONAL CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE APPELLANT THE ASSESSING OFFICER HAS RIGHTLY IMPOSE D THE PENALTY @ 200% (I.E. RS.20 42 296/-) AS AGAINST THE MINIMUM PENALT Y @ 100%. WITH THE RESULT THE ACTION OF THE ASSESSING OFFICER IS CONF IRMED ON THIS GROUND. HENCE THE APPEAL IS DISMISSED ON THIS GROUND. 7. FOR SIMILAR REASONS THE LD. CIT(A) UPHELD THE LEVY OF PENALTY IN THE AYS 2002-03 & 2003-04 ALSO. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSEE WHILE ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 8 CARRYING US THROUGH THE IMPUGNED ORDERS CONTENDED T HAT THE ASSESSEE HAD DISCLOSED COMPLETE FACTS EVEN AT THE T IME OF FILING OF RETURN. IT WAS POINTED OUT THAT THE ASSESSEE CLAIME D EXEMPTION ON THE STRENGTH LETTER DATED 9.11.2001 OF THE HEAD UR BAN DEVELOPMENT ADB FILED ALONG WITH THE RETURN EVEN WHEN TAX HAD B EEN DEDUCTED AT SOURCE FROM THE AMOUNT CLAIMED AS EXEMPT. WHILE INV ITING OUR ATTENTIONS TO PAGE 45 TO 47 OF THE PAPER BOOK THE LD. AR PLEADED THAT THE ASSESSEE BELIEVED BONAFIDE THAT HIS INCOME WAS EXEMPT IN TERMS OF ARTICLE 56 OF THE AGREEMENT ESTABLISHING ADB. WHILE REFERRING TO AGREEMENT DATED 26.10.2001(PAGE 10 PF THE PAPER BOOK) BETWEEN ADB & BABTIE GROUP THE LD. AR POINTED OUT THAT THE REMUNERATION TO BE PAID TO THE ASSESSEE WAS BUDGETE D IN APPENDIX C. TO A QUERY BY THE BENCH THE LD. AR SUBMITTED TH AT APPENDIX B WAS NOT AVAILABLE NOR IT WAS GERMANE TO THE CLAIM O F THE ASSESSEE. WHILE RELYING UPON DECISIONS IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS 322 ITR 158(SC) AND SARABHAI CHEMICALS PVT . LTD. VS. CIT 257 ITR 355(GUJ) THE LD. AR CONTENDED THAT SINCE ALL THE FACTS WERE DISCLOSED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS PENALTY CAN NOT BE IMPOSED FOR FURNISHING INACCURATE PARTICULAR S OF INCOME OR FOR CONCEALMENT OF INCOME. THE LD. AR WHILE REFERRING T O DECISIONS IN NEW SORATHIA ENGINEERING CO. VS. CIT 282 ITR 642(GU J) AND DECISION OF THE ITAT AGRA BENCH IN THE CASE OF ITO VS. CHHAIL BEHANI (2010) 36 DTR (AGRA) (TRIB) 453.ADDED THAT S INCE CHARGE WAS NOT PRECISE NO PENALTY COULD BE IMPOSED. ON TH E OTHER HAND THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A) IN THE IMPUGNED ORDERS. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. WE FIND THAT PENALTY U/S 271(1)(C) HAD BEEN LEVIED BY THE AO IN THESE THREE ASSESSMENT YEARS ON THE GROUND THAT THE ASSESSEE FURNISHED INACCURATE PARTI CULARS OF INCOME DUE TO ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 9 EXEMPTION CLAIMED IN RESPECT OF AN AMOUNT INCLUDED UNDER THE HEAD SALARY ON THE STRENGTH OF A LETTER DATED 9.11.2001 OF THE HEA D URBAN DEVELOPMENT ADB FILED ALONG WITH THE RETURN EVEN WHEN TAX HAD B EEN DEDUCTED AT SOURCE FROM THE AMOUNT CLAIMED EXEMPT. THE AO OR THE LD. CIT(A) IN THE IMPUGNED ORDERS HAVE NOT BROUGHT OUT AS TO HOW THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME IN THE RETURN WHI LE CLAIMING EXEMPTION OF AN AMOUNT ON THE STRENGTH OF THE AFORESAID LETTER D ATED 9.11.2001 OF THE ADB. THE ASSESSEE MERELY PUT FORWARD HIS CLAIM IN TERMS OF THE SAID LETTER. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME ' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEF INED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWEVER NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT COPY OR TRANSCRIPT.' 9.1 THE PENALTY U/S 271(1)(C) OF THE ACT I S LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL S ETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AN D DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ANANTHRAMAN VEERASINGH AIAH & CO. VS. CIT - 123 ITR 457; THE FINDING IN THE ASSESSMENT PROCEEDINGS CANN OT BE REGARDED AS CONCLUSIVE FOR ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 10 THE PURPOSES OF THE PENALTY PROCEEDINGS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADD ITIONS. IT IS THEREFORE NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIN D OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. THE PROVISIONS OF SECTION 271(1)( C ) OF THE ACT STIPULATE THAT IF THE ASSESSING OFFICER OR THE CIT(APPEALS) OR THE COMMISSIONER IN THE COURSE OF PROCEEDINGS UNDER TH IS ACT IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS THEREOF HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES T HE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF. EXPLANATION 1 TO SECTION 271(1)( C ) OF THE ACT MENTIONS THAT WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR THE CIT (APPEALS) OR TH E COMMISSIONER TO BE FALSE OR SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE T O SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCL OSED BY HIM THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSE OF CLAUSE ( C ) OF SECTION 271(1) BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED. IN OTHER WORDS THE NECESSARY INGREDIENTS FOR ATTRACTING EXPLANATION 1 TO SECTION 271(1)( C ) ARE THAT ( I ) THE PERSON FAILS TO OFFER THE EXPLANATION OR ( II ) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE A O OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE OR ( III ) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABL E TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 11 9.2 IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE T HREE CATEGORIES THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION 271(1)( C ) COMES INTO PLAY AND THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE CONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTIC ULARS HAVE BEEN CONCEALED FOR THE PURPOSES OF CLAUSE ( C ) OF SECTION 271(1) AND THE PENALTY FOLLOWS. ON TH E OTHER HAND IF THE ASSESSEE IS ABLE TO OFFER AN EX PLANATION WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME HAVE BEEN DISCLOSED BY HIM THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION 1 TO SECTION 271(1)( C ) OF THE ACT AND IN THAT CASE THE PENALTY SHALL N OT BE IMPOSED. EXPLANATION 1 TO SECTION 271(1)(C)(III) RAISES A PR ESUMPTION IN CASES AS MENTIONED ABOVE. THIS PRESUMPTION IS TO THE EFFECT THAT THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME BY THE AO OR THE CIT(AP PEALS) OR THE CIT IN THE QUANTUM PROCEEDINGS SHALL BE DEEMED TO REPRESENT TH E INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE EXPRESS ION 'FAILS TO OFFER AN EXPLANATION' OR 'OFFERS AN EXPLANATION WHICH IS FOU ND BY THE INCOME TAX OFFICER OR APPELLATE ASSISTANT COMMISSIONER OR THE COMMISSIONE R (APPEALS) TO BE FALSE' OCCURRING IN CLAUSE (A) OF THE EXPLANATION 1 TO S ECTION 271(1)(C) REFERS TO THE QUANTUM PROCEEDINGS. THEREFORE IN THE CASE WHERE N O EXPLANATION WAS GIVEN IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME IN RESPECT OF THE AMOUNT ADDED OR DISALLOWED THEREIN OR THE EXPLANATI ON GIVEN IN RESPECT THEREOF WAS ALREADY FOUND IN SUCH ASSESSMENT PROCEEDINGS TO BE FALSE THERE WOULD ARISE A PRESUMPTION THAT PARTICULARS OF SUCH ADDED OR DIS ALLOWED INCOME WERE CONCEALED. IN SUCH CASES FALLING UNDER CLAUSE (A) O F EXPLANATION 1 THERE CAN ARISE NO QUESTION OF ALLOWING THE ASSESSEE TO URGE THAT HE HAD A BONA FIDE BELIEF IN THE EXPLANATION WHICH WAS PROVED TO BE FALSE OR WHICH NEVER WAS GIVEN FOR ONE CANNOT BE SAID TO HAVE A REASONABLE BONA FIDE BELIE F IN AN EXPLANATION WHICH NEVER WAS GIVEN OR AN EXPLANATION PROVED TO BE FALS E. HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF V. JT. CIT [2007] 210 CTR (SC) 228 : [2007] 291 ITR 519 (SC) WHILE CONSIDERING THE SCOPE OF THE PROVISIONS U/S 271(1)( C ) OF THE ACT OBSERVED IN THE FOLLOWING TERMS: ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 12 THE LEGAL HISTORY OF SECTION 271(1)(C) OF THE ACT TRACED FROM THE 1922 ACT PRIMA FACIE SHOWS THAT THE EXPLANATIONS WERE APPLIC ABLE TO BOTH THE PARTS. HOWEVER EACH CASE MUST BE CONSIDERED ON ITS OWN FA CTS. THE ROLE OF THE EXPLANATION HAVING REGARD TO THE PRINCIPLE OF STATU TORY INTERPRETATION MUST BE BORNE IN MIND BEFORE INTERPRETING THE AFOREMENTIONE D PROVISIONS. CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 CATEGORICALLY STATES THAT THE PENALTY WOULD BE LEVIABLE IF THE ASSESSEE CONCEALS THE PARTICULARS O F HIS INCOME OR FURNISHES INACCURATE PARTICULARS THEREOF. BY REASON OF SUCH C ONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE FOR PENALTY. IMPOSITION OF PENALTY IS NOT AUTOMATIC. LE VY OF PENALTY IS NOT ONLY DISCRETIONARY IN NATURE BUT SUCH DISCRETION IS REQU IRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEPING THE RELEVANT FACTO RS IN MIND. SOME OF THOSE FACTORS APART FROM BEING INHERENT IN THE NATURE OF PENALTY PROCEEDINGS AS HAS BEEN NOTICED IN SOME OF THE DECISIONS OF THIS COURT INHERES ON THE FACE OF THE STATUTORY PROVISIONS. PENALTY PROCEEDINGS ARE NOT T O BE INITIATED AS HAS BEEN NOTICED BY THE WANCHOO COMMITTEE ONLY TO HARASS TH E ASSESSEE. THE APPROACH OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAI R AND OBJECTIVE. THE TERM 'INACCURATE PARTICULARS' IS NOT DEFINED. F URNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHI NG OF INACCURATE PARTICULARS. EVEN IF THE EXPLANATIONS ARE TAKEN RECOURSE TO A F INDING HAS TO BE ARRIVED AT HAVING REGARD TO CLAUSE (A) OF EXPLANATION 1 THAT T HE ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A FINDING THAT THE EXPLANATION OFFERED BY AN ASSESSEE IN THE EVENT HE OFFERS ONE WAS FALSE. HE MUST BE FOUND TO HAVE FAI LED TO PROVE THAT SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE F ACTS RELATING TO THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. T HUS APART FROM HIS EXPLANATION BEING NOT BONA FIDE IT SHOULD HAVE BEE N FOUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WAS MATERIAL TO T HE COMPUTATION OF HIS INCOME. 9.3 IN THE LIGHT OF AFORESAID OBSERVATION S OF THE HONBLE APEX COURT WHAT IS TO BE SEEN IN THE INSTANT CASE IS WHETHER THE S AID CLAIM MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RE LEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED THE ASSESS EE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L)(C) OF THE ACT. LEARN ED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THERE WAS NO CONCEALMENT OF PART ICULARS OF INCOME BY THE ASSESSEE NOR DID THE ASSESSEE FURNISH INACCURATE P ARTICULARS AND THEREFORE THE NOTICE UNDER SECTION 271(1)(C) WAS ISSUED WITHOUT A NY BASIS. IT DOES APPEAR FROM THE IMPUGNED ORDERS THAT THE ASSESSEE HAD DISCLOSED MATERIAL HAVING BEARING ON THE CLAIM FOR EXEMPTION . THE AFORESAID LETTER DATE D 9.11.2001 OF THE ADB FILED WITH RETURN AND LETTER DATED 23.6.2006 OF THE PRINC IPAL PROCUREMENT SPECAILIST ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 13 ADB FILED ALONG WITH THE SUBMISSIONS DURING THE ASS ESSMENT PROCEEDINGS BEAR TESTIMONY TO THE CLAIM FOR EXEMPTION WHICH WAS ULT IMATELY NEGATIVED BY THE LD. CIT(A) IN THE AY 2004-05 WHILE THE ASSSESSEE ACCEPT ED THE FINDINGS OF THE AO IN THE AYS 2002-03 & 2003-04. THE AO AND THE LD. CIT( A) EITHER IN THE ASSESSMENT PROCEEDINGS OR EVEN DURING THE PENALTY PROCEEDINGS DID NOT DOUBT THE GENUINENESS OF THE AFORESAID LETTERS DATED 9.11.200 1 & 23.6.2006 OF THE AUTHORITIES IN ADB NOR EVEN DOUBTED THE BONAFIDE OF THE CLAIM FOR EXEMPTION ON THE STRENGTH OF THESE TWO LETTERS. IT WOULD THERE FORE APPEAR THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF WHILE MAKING THE CLAI M FOR EXEMPTION. THE FACTS RELATING TO THE EXPLANATION GIVEN IN THE QUANTUM PR OCEEDINGS AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME WERE DISCLOSED DURI NG THE QUANTUM PROCEEDINGS. THE REQUIREMENT OF THE EXPLANATION 1(B) THEREFORE STOOD SATISFIED AND THE PRESUMPTION UNDER THE EXPLANATION WOULD NOT APPLY I N THE CASE OF THE ASSESSEE. THEREFORE THE BURDEN WAS ON THE REVENUE TO PROVE THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. MERELY BECAUS E THE ASSESSEE CLAIMED EXEMPTION EVEN WHILE TAX HAD BEEN DEDUCTED AT SOURC E FROM THE AMOUNT SO CLAIMED EXEMPT DID NOT NECESSARILY FOLLOW THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS THEREOF. AS OBSERVED BY THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF SARABHAI CHEMICALS LTD.(SUPRA) THE EXPLANA TION AND THE FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME CAN BE PRODUCED EVEN DURING THE ASSESSMENT PROCEEDINGS IN WHICH IF THE PARTICULARS OF THE ASSE SSEE'S INCOME ARE NOT DISCLOSED OR IF INACCURATE PARTICULARS ARE FURNISH ED THAT WILL GIVE RISE TO LIABILITY TO PAY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE CASE UNDER CONSIDERATION UNDISPUTEDLY THE ASSESSEE CLAIMED EXEMPTION ON T HE BASIS OF AFORESAID LETTERS DATED 9.11.2001 & 23.6.2006 OF THE ADB EVEN WHEN T AX HAD BEEN DEDUCTED BY THE COMPANY OF WHICH HE IS DIRECTOR . AS IS APPAREN T FROM THE IMPUGNED ORDERS ALL THE RELEVANT FACTS HAVE BEEN DISCLOSED BY THE A SSESSEE IN RESPECT OF THEIR CLAIM FOR EXEMPTION. IN FACT ON THE BASIS OF DISCL OSURES ALREADY MADE DURING THE QUANTUM PROCEEDINGS CLAIM FOR EXEMPTION WAS DENIE D. WHEN THE ASSESSEE HAS MADE A PARTICULAR CLAIM IN THE RETURN OF INCOME AND HAS ALSO FURNISHED ALL THE MATERIAL FACTS RELEVANT THERETO THE DISALLOWANCE O F SUCH CLAIM CANNOT ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 14 AUTOMATICALLY LEAD TO THE CONCLUSION THAT THERE WAS CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASSESSEE OR FURNISHING INACCURATE PARTICULARS THEREOF . WHAT IS TO BE SEEN IS WHETHER THE SAID CLAIM MADE BY THE AS SESSEE WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVANT THERETO HAV E BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L)(C) OF THE ACT. SINCE ALL THE MATERIAL FACTS RELEVANT TO THE SAID CLAIM OF EXEMPTION ON THE STRENGTH OF AFORESAID LETTERS DATE D 9.11.2001 & 23.6.2006 OF THE ADB HAD BEEN FURNISHED BY THE ASSESSEE IN OUR OP INION IT IS NOT A FIT CASE TO ATTRACT THE LEVY OF PENALTY U/S 271(L)(C) OF THE AC T ON THAT SCORE. A MERE REJECTION OF THE CLAIM OF THE ASSESSEE BY RELYING ON DIFFEREN T INTERPRETATIONS DOES NOT AMOUNT TO CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE.. HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AJAIB SINGH & CO. (2001) 170 CT R (P&H) 489 : (2002) 253 ITR 630 (P&H) HAVE OBSERVED THAT MERELY BECAUSE CERTAIN E XPENSES CLAIMED BY THE ASSESSEE ARE DISALLOWED BY AN AUTHORITY IT CAN NOT MEAN THAT PARTICULARS FURNISHED BY THE ASSESSEE WERE WRONG. IT WAS HELD THAT MERE DISALLOWANCE OF EXPENSES PER SE CANNOT MEAN THAT ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS OF ITS INCOME. IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAD G IVEN ALL THE PARTICULARS OF INCOME AND HAD DISCLOSED ALL FACTS T O THE AO. IN SUCH CIRCUMSTANCES HONBLE DELHI HIGH COURT HELD IN TH E CASE OF COMMISSIONER OF INCOME-TAX.VS BACARDI MARTINI INDIA LIMITED. 288 IT R 585(DEL) THAT NO PENALTY WAS LEVIABLE. IN CIT VS. HARSHVARDHAN CHEMICALS & MINERALS LTD. (259 ITR 212) (RAJ) HONBLE RAJASTHAN HIGH COURT UPHELD THE FINDI NG OF THE TRIBUNAL THAT WHEN THE ASSESSEE HAS CLAIMED SOME AMOUNT THOUGH THAT IS DEBATABLE IN SUCH CASES IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED A NY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION OF THE TAX. RECE NTLY HONBLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS ARISING OUT OF SLP (C) NO.27161 OF 2008 VIDE THEIR ORDER DATED 17.3.2010 REPORTED IN 322 ITR 158(SC) HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLA IM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. HONBLE APEX COURT OBSERVED IN THE SAID CASE THAT AS THE ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 15 ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN WHICH DETAILS IN THEMSELVES WERE NOT FOUN D TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. 9.4 AS REGARDS PLEA OF THE PRECISE CHARGE AS T O WHETHER THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR WHETHER AN Y INACCURATE PARTICULARS THEREOF HAD BEEN FURNISHED BY THE ASSESSEE WE FIND THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED ONLY ON THE GROUND THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND SUBSEQUENTLY P ENALTY HAS BEEN IMPOSED ON THAT SCORE ONLY AS IS EVIDENT EVEN FROM THE GROUND S RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) IN THESE THREE APPEALS. THER EFORE THIS PLEA ON BEHALF OF THE ASSESSEE IS NOT TENABLE AND IS REJECTED. 9.5. IN VIEW OF THE FOREGOING WE ARE OF THE OPI NION THAT MERE ERRONEOUS CLAIM IN THE ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INA CCURATE PARTICULARS IS NO GROUND FOR LEVYING PENALTY ESPECIALLY WHEN TAX H AD BEEN DEDUCTED AT SOURCE FROM THE AMOUNT CLAIMED EXEMPT WHILE THERE IS NOTHI NG ON RECORD TO SHOW THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT BON A FIDE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE . IN THESE CIRCUMSTANCES WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT LEVY OF P ENALTY IS NOT JUSTIFIED IN THE AFORESAID THREE ASSESSMENT YEARS. 9.6 IN THE LIGHT OF AFORESAID DISCUSSION WE VACA TE THE FINDINGS OF THE LD. CIT(APPEALS) AND CANCEL THE PENALTY LEVIED BY THE A SSESSING OFFICER. THEREFORE GROUND NO.1 IN THESE APPEALS IS ALLOWED. 10. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TE RMS OF THE RESIDUARY GROUND IN THESE THREE APPEALS ACCORDINGL Y THIS GROUND IS DISMISSED. ITA NOS.826 1318 AND 1319/AHD/2009 FOR AYS 2002-03 2003-04 AND 2004- 05 SHRI SUREN ARVINDBHAI VAKIL 16 11. IN THE RESULT THESE THREE APPEALS ARE ALL OWED. ORDER PRONOUNCED IN THE COURT TODAY ON 6 -8-2010 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 6 -8-2010 COPY OF THE ORDER FORWARDED TO: 1. SHRI SUREN ARVINDBHAI VAKIL 3 ASOPALAV BUNGALO WS BHAIKAKA NAGAR THALTEJ AHMEDABAD 2. THE ITO WARD-1(2) AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-VI AHMEDABAD 5. THE DR BENCH-A ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD